Izvestia, June 1, 2000, pp. 1, 3

Two events took place the other day. The budget of the Russian-Belarussian Union was finally endorsed by deputies after lengthy debate; and rumors began once again about the upcoming end of the investigation into the Mabetex case. Pavel Borodin, former director of the Presidential Affairs Directorate and now State Secretary of the Union, is involved in both events…

Question: Moscow and Minsk had different opinions about the Union budget. Who gained the upper hand in the end?

Borodin: There has never been any discord, if that’s what you mean. There were some disputes among deputies (they wanted the budget to support too many programs) and between Russian and Belarussian finance ministries.

Question: Is it possible that the anti-Borodin campaign in the Swiss media can be attributed to your negotiations with European business leaders? Or is it just the aftermath of some previous battles?

Borodin: As for the Mabetex case, I was questioned as a witness on two occasions. The first interrogation lasted 40 minutes, the second lasted five minutes. During the second session, my signature was authenticated. As far as I know, the investigation is over, and decisions are being made. All political cases ended with nothing to show for them. That goes for Carla del Ponte and for Yuri Skuratov.

Question: Who in Russia or Belarus could be so eager to see you out of the game altogether?

Borodin: Our oligarchs, very many of them, are accustomed to re-export goods and to create devious arrangements whereby a Belarussian-made tractor is sold in Moscow for less than the production cost. That’s interesting, you know. Everyone is used to the idea that we manufacture 400,000 TV sets and officially import 200,000 more, while the capacity of the domestic market is estimated at between 3.5 million and 4 million. That’s big money we are talking about here. About a million cars are assembled in Russia and Belarus every year, and about 100,000 more are legally imported. The market capacity is about 3 million. A TV set can be brought into the country in a car – but how do they import cars then? The Union is starting to tread on some oligarchs’ toes…


Izvestia, June 1, 2000, p. 2

The first few hours of debate over the first presidential draft law, “On the order of formation of the Federation Council of the Federal Assembly of the Russian Federation”, made it clear that the Kremlin should forget about any blitzkrieg. The presidential side has overestimated both its strength and the influence of the president in the lower house of parliament. Most likely, this will be a war of attrition. The Kremlin will have to use both official channels of “working deputies over”, and unofficial channels. Even that, however, is not a guarantee that Putin’s plans for reorganization of the Federation will be implemented in their original form.

Presidential Representative in the Duma Alexander Kotenkov explains the motives and the contents of the planned reforms.

Kotenkov: “Experience has shown that the current model of the Federation Council is not ideal, because it fails to ensure smooth legislative process.”

This is what the Kremlin is proposing: regional legislatures should elect senators for a four-year period, from candidates nominated by the head of the local representational power body and the head of the Federation subject.

All this will cost 16.4 million rubles a year. This money is needed for salaries of new senators, whose status and consequent privileges will make them equal to federal ministers. Kotenkov says this sum will not be too much of a burden for the federal budget.

The alternative law, drafted by Yelena Mizulina of Yabloko, would require 2 billion rubles a year for direct senatorial elections.


Izvestia, June 1, 2000, p. 3

Vladimir Putin forwarded his budget message to the Duma yesterday. Today the government is supposed to discuss the 2001 draft budget. The documents indicate that once the hierarchy of political power has been reshaped, the Kremlin intends to revise economic relations with the regions.

In his message, Putin advocates the need for a communal reform but emphasizes that it should be implemented in such a way as to prevent any social tension. “Reasonable” reduction of the number of state officials is also proposed.

Everyone is to pay income tax. State-sector employees will have their wages raised by 20%, and military personnel will get 10% more.

And here is another significant initiative: VAT will no longer be split into federal and regional parts. It will all go to the federal budget. That means about 60 billion rubles. There was a time when the regions fought tooth and nail for their share of this tax.

Not all of Putin’s initiative may pass the Duma. The budget will pass, the government has no doubts about that. Problems begin in the Federation Council, because governors do not want to lose their share of the VAT or any revenues of the Road Fund. In any case, it is already clear that Moscow is doing with state finances what is being done in politics: money is to be concentrated in the center.


Izvestia, June 1, 2000, p. 3

Governor Yevgeny Nazdratenko of Primorye (Maritime Territory) advocates moving 5 million people from central Russia to the Russian Far East. He says they should settle in the Amur region and the Khabarovsk and Primorye territories, to create parity in population with the north-western provinces of China.


Izvestia, June 1, 2000, p. 3

Secretary of the Security Council Sergei Ivanov has announced that Mikhail Fradkov, former minister of commerce, has been appointed deputy Secretary of the Security Council by a presidential decree. The existing seven deputy secretaries and the senior deputy secretary (Vladislav Sherstyuk) have retained their posts. The post of another senior deputy secretary was introduced by presidential decree.


Moskovsky Komsomolets, June 1, 2000, p. 1

Boris Berezovsky is one of the few Duma deputies to speak out against the “regional reforms”. His open letter to President Vladimir Putin, which criticizes the Kremlin’s initiatives (Berezovsky says they “do more harm than good”), is the talk of the day.

Most analysts are wondering why Berezovsky decided to attack Putin in the first place.

There are three theories. The first has it that Berezovsky is the mouthpiece of the regional leaders, who are afraid to speak out against the president. It is common knowledge that Berezovsky has enough links with the regions. The Caucasus is undoubtedly a sphere of his interests. And the federal center may ask some very awkward questions of the regional leaders in the Caucasus. Aushev in Ingushetia and Magomedov in Dagestan are believed to have allowed local legislation to deviate too far from the Constitution… Siberia, where the oil of Sibneft flows, is another sphere of interest for Berezovsky. Berezovsky’s contacts with the local leaders are close enough, and establishing new contacts with presidential envoys is not Berezovsky’s idea of fun.

The second theory assumes that Berezovsky is defending the senators because he has reason to fear for his own future. Governors and oligarchs are the two main problems facing Putin. He is dealing with the governors now, and may well decide to deal with the oligarchs soon. That is allegedly why Berezovsky is forming an “anti-Kremlin front” to explain to Putin that a president is not an omnipotent master in Russia. This is Berezovsky’s survival instinct at work.

And here is the third theory. Berezovsky is creating an illusion of opposition to the Kremlin… doing what the Kremlin itself has told him to do. Since the public believes that “what is good for Berezovsky must be bad for Russia”, everyone is supposed to assume that if Berezovsky is objecting to the proposed reforms, then these reforms must be good. And anyone else who disagrees with the reforms will be automatically associated with the odious business tycoon.


Rossiiskaya Gazeta, June 1, 2000, p. 1

District directorates for combating organized crime “answer directly to the Interior Ministry”. Interior Minister Colonel General Vladimir Rushailo says that they will be answerable to the Interior Ministry now, and not to the local authorities as before.


Trud-7, June 1, 2000, p. 2

US President Clinton will come to Moscow after visiting Portugal and Germany. The stopover in Lisbon will allow him to get first-hand knowledge of Vladimir Putin from the European Union leaders who are just back from Moscow: Prime Minister Antonio Gutteris, Chairman of the European Commission Romano Prodi, and Javier Solana, who is in charge of foreign policy and security in the European Union.

British Prime Minister Tony Blair and Japanese Prime Minister Yoshiro Mori were the first to begin putting out feelers to Putin. Their blitz-visits to St. Petersburg were followed by other contacts, including talks with NATO foreign ministers: specifically, talks between US Secretary of State Madeleine Albright and Foreign Minister Igor Ivanov in Florence last week. In other words, not only Moscow and Washington, but all American allies have contributed to preparations for the Russian-American summit, a fact which emphasizes its importance. It would not be much of an exaggeration to say that Clinton’s negotiations with Chancellor Schroeder tomorrow are directly related to the upcoming summit in Moscow too. Reuters reports that Clinton will hear a lot of criticism in Germany of Washington’s plans to deploy a national missile defense system. Berlin believes that this could result in another round of the arms race.

Further reduction of strategic arms (i.e. START III) will also be discussed at the summit. Moscow proposes cuts to 1,500 warheads in each arsenal, while Washington insists on 2,000 or 3,000.

Because of the existing discord on the question of strategic arms reduction, Washington is trying to cool down expectations somewhat.

Samuel Berger: “I do not expect any agreements to be signed at the summit…”


Trud-7, June 1, 2000, p. 1

Irina Khakamada of the Union of Right Forces became a deputy chairwoman of the lower house of parliament yesterday. Previously, this post had been held by Boris Nemtsov, who became leader of the Union of Right Forces faction when Sergei Kirienko was appointed presidential envoy for the Trans-Volga federal district.